Life Insurance

Life Insurance Guide for LGBTQ Individuals

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Despite a long-earned evolution of social norms, members of the LGBTQ community continue to face discrimination daily. The barriers of employment discrimination and wage gaps that can negatively impact these individuals' financial security are real. And as a double-whammy, according to industry group LIMRA, the LGBTQ community is one of the more uninsured populations in the United States.

Generally speaking, the more financially well-off you are, the less essential a financial safety net is. The inverse is also true, and life insurance for the LGBTQ community can serve as a safety net for those at-risk.

Life insurance discrimination laws

Are insurance company underwriters allowed to discriminate against applicants? While progress has been made with countering discrimination in life insurance underwriting, there's a long way left to go. 

Just this year, Colorado passed stronger anti-discrimination laws that will help protect members of the LGBTQ community from life insurance discrimination. 

However, at a federal level, things are different. Federal law doesn't strongly limit discrimination against LGBTQ individuals in life insurance underwriting. Instead, these laws are passed mainly by states. As a result, there can be a vast difference in protection between states. 

One area where individuals still encounter barriers is that there is no uniform approach to gender. Some insurers will use birth gender, while others will use the gender with which the applicant identifies. This can be especially important to keep in mind when you're searching for LGBTQ-friendly insurance companies.

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Many people within the LGBTQ community encounter discrimination from multiple angles. Individuals with numerous aspects of their identity being discriminated against can face compounded difficulties. 

For instance, if you're a black lesbian, you're more likely to face discrimination than a white lesbian or a straight black woman. Intersectionality can become even more complicated when some parts of your identity are legally protected from discrimination while other aspects aren't. Sexual orientation and race are common targets of prejudice. However, there are more legal protections against racial discrimination in many places. 

The more aspects of your identity facing discrimination, the more important it can be to maintain extra layers of financial protection. That's because this discrimination can often lead to lower pay, less job security, and greater financial risk. 

Life insurance goals

People purchase life insurance for many reasons, but there's a common underlying theme: Policies exist to increase financial security in the future. From retirement planning to protecting against business debt or guaranteeing your child's future, people take out life insurance policies to help protect their loved ones and achieve their goals. 

Other common uses for life insurance include:

Cover debt

A policy payout can be used to counter accrued debt, so it doesn't impact your estate or family. This protection can be crucial for new business owners who still owe significant business loans. However, it can be a prudent maneuver for anyone living with more debt than they can pay off.

Income replacement

When you're facing the loss of a loved one, coping with a reduction in income on top of that can be overwhelming. Life insurance can help offset this income loss by using the payout as a direct replacement. In these situations, people determine how many years of income to replace and purchase that amount of coverage.

Protect children

Whether it's ensuring a college fund or providing a nest egg, parents often consider their children's financial future when purchasing life insurance. Policy payouts typically don't come with stipulations on usage. So the policyholder and beneficiaries are free to provide that structure themselves. 

Applying for life insurance

With Ethos, applying for our plans online is easy. If you're unsure about life insurance basics, you may want to review our life insurance 101. When you complete the Ethos application process online, you can qualify for life insurance without a medical exam — although some health questions are still required. 

Different insurers use different evaluation systems in underwriting, and many of these include gender as a metric. This inconsistency can create complications for individuals in the LGBTQ community and result in people looking for gender-neutral life insurance or trans life insurance. 

For some, guaranteed issue whole life insurance can fill this need. However, while these policies forgo underwriting, they have higher rates than term plans do. 

Term life

Term policies offer some of the most competitive rates. These plans differ from permanent life insurance. They are preset for a specific amount of time, known as the policy term. The policy will pay out a death benefit to the beneficiaries if the policyholder passes away during the term. However, it's critical to understand that the policyholder can outlive these policies. 

Whole life

Whole life policies are a type of permanent life insurance. The policy will last for the policyholder's entire life so long as the premiums are paid. Ethos offers guaranteed issue whole life policies to applicants between the ages of 66 and 85. Applicants within this age range are guaranteed approval, independent of health issues and medical history.

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